Builders answer call for custom housing

Home prices escalate along with demand

Gene Smith of Aerial Spraying spends almost as much time in the air during crop-dusting season as he does with his feet on the ground.
During that time, he gets a good look at the surrounding Morgan County area from a bird’s eye view. Smith doesn’t know where the money is coming from, but said, “There are quite a few houses being built.”
Even west of town near the river, two new places are being built. That surprises Smith, who said, “The mosquitos are bad out there.”
From the air, Smith sees that the corner pockets of the quarter section plots from 160 acres are where most of these homes have sprouted.
“They sit on about six acres that the irrigation sprinklers aren’t able to reach,” Smith said. The homes to which Smith refers are custom homes built by individual contractors.
Confirming Smith’s observations, Tom Morrow, a planning administrator at the Morgan County Planning and Zoning office, has noted an increase in exemptions. An exemption is an application to subdivide a 40-acre area into smaller minimum lots.
“Five or six years ago, the average was about two to three a month,” Morrow said. “Currently, applications have almost doubled.”
Exemptions are occurring countywide, but especially on the west side, where Morrow believes more people are moving out and away from the Front Range.
Some of the people who are building these homes in the Morgan County area are county residents from town moving to a custom-built home in the country. The others are people who Jim Zwetzig, Fort Morgan mayor, believes can “live anywhere and still do their job.”
Examples include IBM employees, Leprino management, doctors and young people who grew up in the country and are moving back. The dream home in the country is “en vogue” in Morgan County.
The demand for stylish, new dream homes has given local contractors strong business. The demand is enough to keep a contractor’s calendar filled for a year with new-home construction, remodeling and additions to existing homes.
The demand could easily attract outside contractors to rub shoulders with the local ones for work, but so far, it really hasn’t. Between the demands along the Front Range for contractors and the traveling distance to the Morgan County area, the contracting labor force remains distinctly local.
In contrast, the City of Fort Morgan until recently suffered a shortage of moderately priced housing – the kind of housing traditionally found in most subdivisions along the Front Range.
Low interest rates, the opening of new industries such as Leprino Foods, and the expansion of the Excel meat-packing plant created a demand for housing in Fort Morgan that supply couldn’t meet.
Though the need was apparent, the local contracting force was unable to fill the demand.
Sandy Schneider-Engle, progress director for the city, said, “Unless you have a large crew and develop a subdivision all at once, the development gets strung out over a long period of time.”
She added, “It’s hard for a small contractor to complete such a large project and stay profitable.”
The shortage continued because the cost of building full-scale subdivisions outweighed the local contracting resources.
Gradually, demand for moderately priced housing and the supply have equalized. Matt Varney, president of the Colorado Community First State Bank, said the current market is carrying roughly 100 to 125 houses at any one time.
For Fort Morgan, that number is comfortable compared with the shortage of several years ago or the glut of the 1980s.
Concerning the balance of the Fort Morgan housing market, Zachary Thornton, a broker for Wheeler Realty in Fort Morgan, said, “There is no doubt that we’re going to have a need for housing as northeastern Colorado grows, applying continued pressure for the need to have affordable homes within the community.”
The word “affordable” means different things to different people. As the housing market in Fort Morgan has changed drastically in the 1990s, so has the pricing.
“There were homes in Fort Morgan that were purchased in the 1980s for as much as you pay for an automobile today,” Thornton said. “People got spoiled, so now with the growth, improvement and increase in costs, they consider the price is inflated. They don’t understand the big picture of the housing market.”
The big picture to which Thornton refers concerns the market in Fort Morgan as compared with the Front Range. Though the prices may seem inflated to residents, housing is still cheaper compared with Front Range communities.
The middle-income homes are in the $80,000 range, while the custom homes built in the country are $140,000 or more.
Despite these reports of a balanced housing market, the Fort Morgan community still has a housing shortage it hasn’t been able to fill: low-income housing. Every community faces the challenge of providing affordable living for low-income families.
“Many of the jobs Fort Morgan provides are agricultural-based and don’t provide a high salary,” Zwetzig said. “Out of a town of 10,000 people, the agricultural employment has a high percentage of the population which doesn’t provide the income necessary to afford a $140,000 home.”
Zwetzig confirmed that the shortage is in the $60,000 to $80,000 range.
“Those go pretty fast,” he said, especially because it’s not feasible for contractors to build homes in that range.
Material costs alone are between $61,000 to $91,000. The Farmers Homes Administrative Direct Loan, which had financed moderate-income homes with a loan at 1 percent interest, has been discontinued, further deterring contractors.
Renting could also be an option, but rental units seem more scarce than for-sale units. Bill Lerrick, a local real estate developer, is building a 50-unit apartment complex. Completion may take longer than expected, as the city and Lerrick work out utility arrangements.
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